Because of this, I am not able to grasp objects less than 7cm in diameter in simulation while real mico arm can grasp objects as small as 5.5 cm in diameter. The problem seems to be the one active and one passive finger joint in real mico arm while 2 active finger joints in simulated mico gripper. I tried changing the motor (MicoHand_fingers12_motor2) to passive but still could not get the desired behaviour. Can you please help me with getting the same behaviour from simulated mico gripper as real mico gripper.

For testing, you can look at the sample scene provided for grasping using mico and jaco arms by vrep (motionPlanningAndGraspingDemo.ttt)

grippers are usually difficult to simulate. In the case of the Mico gripper, the actuation mechanism has been modified, in order to provide better grasping stability for larger objects.You will have to adjust a few values to obtain the behaviour you desire. For instance, in the attached child script, you can provide a different closing velocity for joint0 and for joint1 (e.g. joint1 with a closing velocity 4x smaller than joint0). At the same time, you can also play with the joint forces (since in the simulated mechanism, the active joints are prismatic joints): e.g. increase the joint0 force to the double.

I noticed that the maximum value of MicoHand_joint1_finger1 is set to 45 degrees. In real mico gripper it can go upto 80 degrees. If I set it to 80 degrees, I can see the gripper closing like real mico gripper. Though the maximum value it can reach on gripper closing is 60 degrees.

Was wondering why it was set to maximum 45 degrees. And the inability to reach the actual 80 degrees on closing is due to slightly longer fingers in the simulation model?

It was limited mainly for stability reasons and because most would use it to grip something relatively large. But you are free to adjust the limits to your needs. Control of the gripper might become more difficult however. It always depends on the application.